Section 8 Voucher Reform Act of 2007
It has been less than 2 months since the Committee on Financial Services considered major reforms to the section 8 program. The Section 8 Voucher Reform Act of 2007, which passed the Committee on Financial Services by a vote of 52-9, is truly the culmination of work that began in the 109th Congress.
There are many Members of Congress who have expressed major concerns to me about the future stability of the section 8 voucher program, given the recent changes in the funding formula and its impact on tenants. This bill addresses many of those problems and will return much needed stability to the section 8 program and the 2 million low-income families who rely upon it.
We heard from the U.S. Department of Housing and Urban Development, public housing agencies, national housing interest groups and advocates, and other housing experts about the importance of reforming the section 8 program. While there is consensus that the section 8 program needed to be reformed, HUD disagrees on how to reform the program.
National housing organizations like the National Low Income Housing Coalition and the Center on Budget and Policy Priorities which represent those directly affected by the change in the funding formula agree that basing the funding for a program as important as the voucher program on data that is 3 years old is just simply bad policy.
In 2004, Congress changed how we paid public housing authorities for vouchers under lease. Instead of paying the actual cost of the voucher, the decision was made to pay for what the voucher cost during a 3-month period in the previous year. This had disastrous consequences for PHAs. Many saw a cut in their funding.
While section 8 recipients had to bear the brunt of this policy change as waiting lists closed, many low-income families who had been waiting for affordable housing for years suddenly found housing denied to them. Because of cost concerns, some families were denied their right to move to areas that may have been a bit more expensive but had better job and educational opportunities. Some families saw an increase in rent as many PHAs scrambled to cut costs.
As families struggled under this formula, so did some of our Nation's largest PHAs. The snapshot funding system had consistently and has consistently underpaid some PHAs to the benefit of others. Because of the funding instability, these PHAs had no reason to house more families. As a result, housing authorities are sitting on $1.4 billion in unspent voucher funds. This nonuse of our voucher dollars is unacceptable because we have lost 150,000 vouchers as a direct result of the funding formula.
Clearly, this formula must be changed for the good of public housing agencies and the families they serve. HUD is just wrong in this issue. I flatly reject their just-released statement of policy on the bill. H.R. 1851 updates the voucher formula by basing funding for vouchers on the previous year's leasing and cost data.
The use of more accurate data will ensure that we stop overpaying and underpaying PHAs for vouchers, but instead come as close as we can to paying the actual cost of the voucher. This will enable HUD to better control costs than the section 8 voucher program. This funding approach was recently embraced by both Houses of Congress in H. J. Res. 20.
Vouchers are a scarce resource, but are even scarcer since the funding formula changed in 2004. Only one out of four families who are eligible for housing assistance, including vouchers, actually receive it. H.R. 1851 provides PHAs with several resources for increasing the number of families they serve.
First, the bill provides for the recapture and redistribution of most unspent voucher funds for housing agencies that have chosen not to use these dollars to PHAs that are capable and willing to spend them. This reallocation system will provide PHAs with an incentive to house more families.
Second, the bill provides tools for PHAs to pay for increased costs or emergencies without having to cut assistance to families or to request new funding from the HUD or the Congress. The bill allows PHAs to retain up to a 1-month reserve in the formula's first year. For those PHAs that need additional funds, the bill allows them to borrow up to 2 percent of their budget authority, to be repaid within the first 3 months of the following year.
Third, the bill provides an authorization of appropriation for 20,000 new incremental vouchers per year for 5 years. Congress has not authorized new vouchers since 2002.
During this period, we all know that the need for voucher assistance has grown, not declined. We are not meeting the need for housing vouchers for very low-income persons in this country, working families, the disabled and elderly. Additional vouchers are needed to make sure that the voucher program continues to keep up with the ever-expanding need for affordable housing in this Nation.
Fourth, the bill provides incentives for PHAs to increase families served by tying administrative funding to the number of families housed.
Fifth, the bill restores housing choice, an important feature of the voucher program which has been lost because of cost concerns. H.R. 1851 would eliminate the complex billing process between PHAs using portable vouchers.
Mr. Chairman, this is a bill that will restore stability and predictability to the Nation's largest Federal housing program by fixing the broken funding formula. H.R. 1851 provides for the needs of the families, public housing agencies and landlords who participate in this program.
The funding formula, however, is not the only aspect of the section 8 program in need of reform. Today, housing agencies and program recipients must deal with the complicated set of rules for the determination of rent, recertification of income and inspection of housing units. H.R. 1851 simplifies those requirements, while maintaining current affordable standards.
H.R. 1851 also includes tools to encourage voucher families to move to economic self-sufficiency. Families should not have to pay more in rent because they want to work to provide for their families. By disregarding a portion of earned income, H.R. 1851 would protect families from any resultant increases in rent.
Families also shouldn't be penalized for pursuing educational opportunities. Currently, many families in the voucher and public housing programs can find themselves excluded from work and economic opportunities because of a lack of credit history or low credit scores. The bill would allow the Department to work with the Nation's credit bureaus to allow for the reporting of the rental payment history of voucher and public housing recipients.
In addition, the bill will increase homeownership opportunities for voucher families by allowing them to use a section 8 voucher to make a down payment on their first home. Importantly, the bill provides for a change to the funding structure for family self-sufficiency coordinated to ensure that families have the tools to take advantage of these opportunities.
Without going into all of what is taken care of and what is reformed, I have tried to share the major reforms that we have created for our families who will be receiving assistance through the section 8 program.
Mr. Chairman, I reserve the balance of my time.
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